Understanding the roles between the mortgage lender, the insurance agent, and the customer can sometimes be confusing. Mortgage lenders talk in terms of “we’re taking care of your escrow account for you.” While that is partially true, there are still some important details that you need to do on your end.
Refinancing your home has been all the rage this summer. In fact, if you haven’t yet, you should look into it because rates are low! I wrote a very important post a few months back about what you need to do on your end when you refinance. If you missed it, please go back and check it out by clicking here. It’s critical for making sure your insurance transfers over without any gaps or cancellations.
Other than when refinancing, what else do I need to know?
Your home insurance is a pre-paid policy. When the insurance escrow account pays your annual premium, the entire year is pre-paid in full. Then, as you make your home insurance payments each month, a portion of your escrow is being collected and set aside so when the insurance is due again the next year, the entire amount is there to be pre-paid again.
What is the escrow refund when I sell?
In almost every case, we do our very best to catch this for you. Since you’re already likely buying or building a new home, we are typically already working on your new quote. Or, if you’re going to be renting for a short time, we should be in the process of putting together a renter’s quote to continue protecting your belonging. In the situations though where you move out of state, or are simply selling off a rental property you no longer want, without notifying us directly, the policy is going to remain in force. The next notification will be a warning of non-payment when it’s not paid the following year. It’s much easier to make sure everything is handled and the proper amount is refunded if we don’t wait until this point, but rather handle it right with closing.
As always, if this raises any questions for you, please reach out. I am happy to help in any way possible! firstname.lastname@example.org